Sony Ericsson's losses mean Android crucial

Can the company turn things around?

Having already predicted a pessimistic set of financial results, Sony Ericsson's year has gone from bad to worse with a net income loss of €73 million.

This comes after the company posted net income of €1.1 billion for the previous year, highlighting the quick descent Sony Ericsson has experienced this year.

All eyes will be on the handset manufacturer in 2009 after it said that is was developing a new phone using Android Open Source software in the 'highlights'.

The number of units shipped over the last year fell from 103.4 million on 96.6 million, and the sales fell roughly €1.6 billion in the same period.

Operating income, the income realised from Sony Ericsson's operations, posted a loss of €113 million, although restructuring charges of €175m go some way towards explaining the number.

And the news just keeps getting worse for the Swedish-Japanese company, with the average selling price of each handset falling from €125 to €116 from 2007 to 2008.

Downturn

"In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn. The mobile phone market has been greatly affected by this and as expected, the fourth quarter continued to be very challenging for Sony Ericsson,"said Dick Komiyama, President, Sony Ericsson.

"Our business alignment is progressing as planned, with the full effect of annual savings of around Euro 300 million expected by the second half of 2009. We foresee a continued deterioration in the market place in 2009, particularly in the first half."

However, the restructuring charges are designed to bring about in a change in fortunes, according to Sony Ericsson. The aim is to realise a €300 million cost saving is apparently on track, with another €180 million on track to be found too.

In separate news, Sony Ericsson was apparently denied the use of the Playstation Portable brand on new line of phones after an enjoinder to parent company Sony.

It means rumours of a split between the two companies grow ever stronger, with Sony growing increasingly interested in launching phones as standalone devices under its own name.